Dec 2009 - We don’t have to wish them a merry franchise

01 June 2013

DO YOU know how I’d define a waste of breath? It would be wishing the owner of a rail franchise a ‘Merry Christmas’. The fact is – he’s going to have one. You can’t go wrong with a franchise. If it makes money, you keep it. If it doesn’t, you walk away.

Franchises are designed to ensure the owners win – no matter what they do. The terms of the contract are so favourable to investors, they can’t do wrong. The most blatant example of this is the clause that says they don’t need to bother about industrial relations. If they cause a strike by bad treatment of employees or insulting pay offers, they’re not too worried – because the tax-payer will compensate them.

This is the clause that reads ‘the Secretary of State, in his sole discretion, may decide to reimburse or ameliorate net losses of the Franchise Operator arising from industrial action (howsoever caused and of whatever nature)’. This is really remarkable. It means companies can treat staff as badly as they choose – and get paid for doing it!

Dave Calfe from the executive committee had a two year battle to prise information about this clause from the Department for Transport, using the Freedom of Information Act. Then Blaydon MP Dave Anderson was told in the Commons last month that money had been paid out under the clause. He’s now submitted a formal Parliamentary Question asking for details – like who got the money, and how much?

This really is a scandal. Labour has paid money to private companies to compensate them for the inconvenience of legal industrial action by a union affiliated to the Party. It’s the equivalent of the Tories agreeing to fund our members’ wages during an industrial dispute. And worse, it actively protects franchises that have bad industrial relations practices.

Franchises make the government position utterly illogical. If we ask them to intervene on an issue, they says it’s nothing to do with them. They are independent companies and the Department for Transport has no control over them. This is nonsense. Two companies – First Capital Connect and London Midland – were summoned to the Department last month and told to submit action plans to improve their performance.

This is clear intervention by the government, which leads to two conclusions. First it means it can intervene on issues we want raised with companies, like free staff travel. And second, if it does have to intervene, the logic is for the Department to oversee the whole railway in the public sector.

All they need to do is not renew franchises when they run out. That might spoil the festive season for a few franchise holders. But it would cheer me up no end!